Washington (CNN) - House Democrats anxious about health care negotiations prepared to meet Tuesday night as Speaker Nancy Pelosi and the White House conferred with labor leaders unhappy with a tax being considered for the final bill.

Pelosi huddled with several key union leaders in her office earlier Tuesday. President Barack Obama met with a dozen labor heads Monday night, and is scheduled to meet with the entire House Democratic caucus on Capitol Hill Thursday.

At issue for many House liberals and union heads is growing concern that Obama and the congressional leadership will place an excise tax on high-end insurance plans to help pay for the sweeping legislation.
AFL-CIO President Richard Trumka warned Monday that Democrats risk losing critical union support in the upcoming midterm elections if they don't drop the tax.

Proponents of the tax argue it's one of the most effective ways to curb medical inflation. Many Democrats, however, oppose taxing expensive policies because it would hurt union members who traded higher salaries for more generous health benefits.

Obama told National Public Radio in an interview in December that so-called "Cadillac plans ... don't make people healthier, but just take more money out of their pockets."

The House of Representatives did not include a tax on the high-end plans when it passed its reform plan in November. The Senate bill passed in December, however, would impose a 40 percent tax on insurance companies that provide plans valued at more than $8,500 for individuals and $23,000 for families.

Labor leaders have urged Congress and the White House to instead adopt the House health care financing plan, which includes a 5.4 percent income tax surcharge on individuals earning over $500,000 and families earning more than $1 million.

Looming over health care negotiations between the House and Senate is a widely held belief that the more liberal House will ultimately be forced to go along with key aspects of the more conservative Senate bill. The traditionally fractious 60-member Senate Democratic caucus struggled to unify behind a single measure, and needs to remain united to overcome solid Republican opposition.

One possible compromise idea among Democrats trying to bridge the divide between the House and the Senate is to raise the income threshold for the excise tax in an attempt to hit fewer workers, several Democratic leadership sources told CNN.

But some progressives have indicated strong opposition to the idea. New York Rep. Charlie Rangel, the liberal chairman of the House Ways and Means Committee, warned CNN Tuesday that raising the threshold in order to make the tax more politically palatable is "going to be a problem."

The sources said Democratic leaders are considering a range of thresholds as high as $28,000. In order to make up for the difference in lost revenue, an additional boost in Medicare taxes for wealthy Americans is being considered, according to multiple Democratic congressional sources.

The expanded Medicare tax, the sources add, would be designed to cover earnings on investments.

The Senate bill already passed in November would hike Medicare payroll taxes on families making over $250,000; the House bill does not.

Even if House and Senate Democrats reach a compromise on funding, they will still have to tackle a range of other controversial issues. Among other things, Democrats have to reach a final decision on whether to include a government-run public insurance option, as well as language relating to abortion coverage and illegal immigration.

House Democrats are also urging the Senate and the White House to agree to set up a national insurance exchange in the final bill, instead of the state-based exchanges in the Senate bill.

The exchanges are designed to make it easier for small businesses, the self-employed and the unemployed to pool resources and purchase less expensive coverage.

soundoff(31 Responses)

guy from NM

Once again the union will bow down, to the demands of their so called "allied", the Democrats. Anyone out there will dare to raise a voice against this administration that is , just like any other, at the beck and call of the corporate world?

January 12, 2010 07:25 pm at 7:25 pm |

jeff

When did "We the People" become "We the Democrats" This is crazy that the constitution calls for us to be a country of laws not men read what President Washington said. The government should be ashamed of them self.

January 12, 2010 07:35 pm at 7:35 pm |

m smith

Health care for all now.

January 12, 2010 08:02 pm at 8:02 pm |

catmomtx

So many people want to vilify President Obama over health care reform when it is Congress that should be vilified. Congress writes the bills, they vote on the bills, they make the deals, good or bad. and President Obama signs what they send to him. It is about time the American people realize that Congress is the problem. Once their constituents begin to realize that and begin to hold them accountable nothing will get done. They are allowing President Obama to take all the heat and blame while they sit back and protect their financial donors. The American people are not holding them accountable so why should they do anything to help the American people. And, by the way, that goes for Democrats and Republicans.

January 12, 2010 08:26 pm at 8:26 pm |

terry,va

Here's the compromise. Don't worry my Union brothers, you will be exempt and I will tax the hell out of others similarly situated. This is in exchange for your votes of course. I also plan to tax the hell out of every other person that has any money. They don't matter seeing how I got elected by people that don't work and pay taxes. I will give these people even more rebates for their votes. Oh, America the country of CHANGE from hard work to handouts.

January 12, 2010 08:29 pm at 8:29 pm |

Jenn, Philadelphia

So the Democrats can shut out the Republicans (elected representatives of this country, whether you like it or not) and you liberal bloggers are okay with that, but where's the uproar over letting the unions involved in putting this bill together. Of course, since this is being done in secret, we don't really know what other special interest groups are in that back room getting special deals. This should cause all Americans to be outraged.